DOJ and USPTO look to limit standards-based patents

Antitrust enforcers say industry-standard patents should rarely be at the ITC.

The Department of Justice and the US Patent and Trademark Office sent a policy statement [PDF] today, suggesting that the International Trade Commission or ITC back away from enforcing "exclusion orders," which can kick a product off the US market in cases involving standards-based patents.

It's an important issue which just came up last week when the Federal Trade Commission closed its 19-month investigation of Google over antitrust issues. A variety of corporate patent battles have been moved to the ITC recently, including some of the biggest struggles over smartphones.

In closing that investigation, the FTC said that Google shouldn't ask for exclusion orders or injunctions on its standards-based patents.

That sentiment is now being echoed by the DOJ and US Patent Office—for the most part. There are some pretty big exceptions, such as situations where a potential licensee refuses to take a license on a "fair, reasonable and non-discriminatory" or FRAND basis.

Unsurprisingly, one company that was critical of the FTC ending its investigation of Google without charges was Microsoft. Today, Microsoft praised the DOJ/PTO statement as a tougher rule than the one that the FTC endorsed and suggested that the FTC should re-think its position on patents, which (at least according to Microsoft's reading) would allow for more exceptions.

Yesterday, Microsoft also filed papers asking a judge to insist that Google withdraw two of the three patents that Motorola has used against it in an ITC case, because they are based on standards-essential patents. Despite the fact that FTC chief Jon Leibowitz said Google has to shut down its ITC cases, Microsoft noted that the company hasn't yet done so—even as deadlines are looming.

In an e-mailed statement, Microsoft Deputy GC David Howard said, "We're pleased Google has finally withdrawn these claims for exclusion orders against Microsoft, and hope that it will now withdraw similar claims pending in other jurisdictions as required by the FTC Consent Order."

The exception only applies when a defendant simply won't pay even after an amount has been adjudicated to be fair. It doesn't just kick in as soon as the patent holder puts an offer on the table, and the patent holder doesn't get to just decide what is fair.

As a general matter, you can't get an injunction if money damages would suffice to make you whole, and the defendant can and will pay them. When a patent is FRAND you can't usually get an injunction since if you win the amount you are owed is pretty clear. By contrast, with non-FRAND patents there's no duty to issue a license on any terms. Thus you can't jut say that money damages would suffice (you might have wanted to keep the patent out of someone's hands) and an injunction is more appropriate.

Seems like Microsoft only wants the legal system to drag its feet if they are the ones being litigated against. When they go after some one else, they want an automatic default judgement in their favor before the judge even schedules the case. How often do Microsoft lawyers wait until the very last minute to file a motion or brief so that the other side cannot rebuff or reply back. Google has been given a deadline and they can do what they want and act at the last second. I mean isn't that the American way. Fiscal Cliff? Debt Ceiling? Social Security? All very important items that are only dealt with at the last minute/second. It's also very American to try to change the rules in the middle of a game if they don't work in your favor.

It is good to see the gov finally starting to act, standards-based patents should have never made it to court, but every company has their own idea of how much FRAND licensing should be. I also think there should be a review of current patents (if feasibly possible) to see if there are any that are currently not considered standards-based that should be considered. Like most, it would be nice to just get rid of them altogether.

Clearly the companies that invest in R&D to design the standards and protocols that fuel new products are not deserving of protection. You should only be able to get patent protection on truly innovative things like rounded rectangles and sliding to unlock.

if the company is abusing the patent and wont pay the fair price that is the market standard why shouldnt they be able to be banned?

You're asking the wrong question. The question should be, why shouldn't the holder of a standards patent be satisfied with an award of monetary judgement? Why should they get a ban when being part of a standard gives them overwhelming leverage that comes uniquely and mainly from being selected to be part of a standard (they get an extra windfall that comes not from the inherent worth or usefulness of the innovation protected by the patent but by just being selected to be part of a standard). Everyone MUST use ALL the patents in a standard - even if a company doesn't want to use them or would prefer to use another method that doesn't infringe, they can't without falling out of compliance with the standard. This all-or-nothing obligation gives enormous and disproportionate leverage to the standard patent holders, leverage that isn't available to holders of regular, non-standard patents.

On the other hand, the threat of a ban is a lot less dangerous with ordinary patents because there is always the possibility that you can work around them or, in the worse case scenario, not use the patents. The ability to work around or drop a patent is what makes bans for them a lot less troubling. Look at how Google has so far been able to modify their code to get around the ordinary patents held by Apple - if those Apple patents were part of a standard, it would be impossible for Google find non-infringing alternatives and they would basically have to pay any price Apple demanded or risk being banned from the market.

Let's be clear - standard patent holders should get paid, they just shouldn't get bans. They should be able to get a judgment for the amount of the infringement and then an order requiring the infringing patent user to pay up. And that order would be enforced like any other court order. Getting an award of monetary damages is the proper remedy for a standard patent holder because after all, they agreed that in return for being part of a standard, they'd license their patents to any willing party. So getting an judgment of monetary damage makes them 100% whole.

This seems like a good idea at first blush, but it could be a double-edged sword. If standards-essential patents are made significantly less enforceable than others, they become less valuable. Doesn't that just give corporations another reason to stop cooperating on and contributing to open standards in favor of proprietary solutions that they can sue each other for "copying"?

This seems like a good idea at first blush, but it could be a double-edged sword. If standards-essential patents are made significantly less enforceable than others, they become less valuable. Doesn't that just give corporations another reason to stop cooperating on and contributing to open standards in favor of proprietary solutions that they can sue each other for "copying"?

Why does not having the ability to seek a ban make standard patents less enforceable? The two are unrelated, these standard patents are just as enforceable by a court order, just not enforceable with a ban. Companies that follow the standard are obliged to pay for the patents that are part of it - that doesn't change simply because you're prevented from seeking bans. You go to court and get a judgement for damages for infringement and then an order compelling compensation. That's the same protection affording any regular commercial contract.

You're only looking at one side of the picture and not seeing the unfair windfall that standard patent holders get by being part of a standard and thereby becoming mandatory. These patents gains 99.9% of their value simply because they're part of the standard. Even the most minor, peripheral patent in a standard becomes just as powerful as the most important one if you allow the patent holder to get bans. The danger isn't that standard patent holders won't get paid too little but that they'll get paid too much.

Postulator wrote:

Why bother entering into agreements on standards when others can gain the benefits without the cost?

The other side of the coin is, doesn't this just encourage companies to implement solutions that are not standards-based, making consumers' life a lot harder?

You're overlooking that having your patent made a part of a standard is a guarantee of income because everyone has to use and pay you for your patent, unlike an ordinary patent where someone can either try to design it or simply choose not to use the feature that's using the patent. The certainty of income is a great incentive for many patent holders versus the uncertainty of enforcing ordinary patents, which takes time, money and no guarantee that you'll eventually succeed anyway.

Clearly the companies that invest in R&D to design the standards and protocols that fuel new products are not deserving of protection. You should only be able to get patent protection on truly innovative things like rounded rectangles and sliding to unlock.

You can work around those sorts of patents precisely because they are not essential to implement a standard. The patents in discussion here can't be worked around since the standards require them. Thus, "standards-essential patents." If they could be worked around they would not be essential.

There are valid issues with low-quality UI patents etc., but you don't fix them by enabling abuse of the standards process.

If I have a patent that I submit for inclusion in/as a standard, is there any post inclusion control over what that standard is used for, or the devices that it is used in? For example, to take a probably far fetched analogy...

My patent is included in the standards for communications in a network between phones and the network they are on. 7 years later a car manufacturer wants to hook up thei new models to a network. They want to use mobile networks to enable this communication.

Are my patents in the phone standards automatically granted to the car manufacturer on previously agreed FRAND terms, or do I have the right to say "No, that patent was only included in the standard as envisioned using personal mobile communication devices, and not cars"? Who makes the decision that this is OK or not? Is there an industry standards body that assents to the standards being used by the car makers without any of the patent holders in that standard being able to object?

The reason for my question is, when you have your patent included in a standard, does that remove your control over your patent in that standard, even if at the time of inclusion the standard's use wasn't intended for what it may end up being used for/as?

After being included in a standard, can I then remove a patent from that standard, or is it signed up for life?

If I have a patent that I submit for inclusion in/as a standard, is there any post inclusion control over what that standard is used for, or the devices that it is used in?

No control.

Quote:

The reason for my question is, when you have your patent included in a standard, does that remove your control over your patent in that standard, even if at the time of inclusion the standard's use wasn't intended for what it may end up being used for/as?

Yes, you have no control about its subsequent use down the road.

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After being included in a standard, can I then remove a patent from that standard, or is it signed up for life?

Can't remove a patent from a standard, it's irrevocable.

This is the bargain for getting your patent included in a standard - in exchange for everyone being obliged to use it and pay you for it, you give up your right to decide who gets to use it. No one's forcing you to make this deal - you can decline to submit your patent for inclusion in a standard and then maintain control over its use and licensing - but once you submit it and it's accepted as part of the standard, you can't change your mind and must accept the quid pro quo.

This is the bargain for getting your patent included in a standard - in exchange for everyone being obliged to use it and pay you for it, you give up your right to decide who gets to use it. No one's forcing you to make this deal - you can decline to submit your patent for inclusion in a standard and then maintain control over its use and licensing - but once you submit it and it's accepted as part of the standard, you can't change your mind and must accept the quid pro quo.

Thanks for the explanation, one last add-on: Once part of a standard, can a patent be used outside of that standard and I still be forced to license it on FRAND terms?

ddarko: The problem with this law is that companies are now rewarded for bad behavior. If you owned a FRAND patent, I might decide that I don't want to pay what you normally charge. So I don't get a license. You eventually take me to court and I stall at every opportunity. Years go by. Then I happen to get a sympathetic judge in my own state. I ask for court negotiation, which you now can't refuse since you can't ask for an injunction. Maybe the judge decides that your patent isn't worth what you think it is. Your only recourse now is to keep arguing or take the lower rate. That's the potential problem with this ruling.

In Microsoft vs Motorola, Motorola claims Microsoft is unwilling to negotiate and has not offered a reciprocal license for FRAND technologies even after making multiple offers to Microsoft. Microsoft claims the Motorola is asking too much. As far as I have seen, Motorola is asking the same they ask from everyone else. That's not a judgement on whether or not its too much.

The problem here and in Apple's case is that Microsoft and Apple have been making product for many years using patents they haven't paid for. At least in Apple's case, they have refused binding arbitration at least once. How long should the patent owner have to wait to get paid?

If I have a patent that I submit for inclusion in/as a standard, is there any post inclusion control over what that standard is used for, or the devices that it is used in? For example, to take a probably far fetched analogy...

My patent is included in the standards for communications in a network between phones and the network they are on. 7 years later a car manufacturer wants to hook up thei new models to a network. They want to use mobile networks to enable this communication.

Are my patents in the phone standards automatically granted to the car manufacturer on previously agreed FRAND terms, or do I have the right to say "No, that patent was only included in the standard as envisioned using personal mobile communication devices, and not cars"? Who makes the decision that this is OK or not? Is there an industry standards body that assents to the standards being used by the car makers without any of the patent holders in that standard being able to object?

The reason for my question is, when you have your patent included in a standard, does that remove your control over your patent in that standard, even if at the time of inclusion the standard's use wasn't intended for what it may end up being used for/as?

After being included in a standard, can I then remove a patent from that standard, or is it signed up for life?

The consortium will negotiate with the "offender" on your behalf if they believe the patent is being used without their permission. I think you are signed up for the life of the patent.

The problem here and in Apple's case is that Microsoft and Apple have been making product for many years using patents they haven't paid for. At least in Apple's case, they have refused binding arbitration at least once. How long should the patent owner have to wait to get paid?

I'm not familiar with the details of the Microsoft case, but the fundamental disagreement Apple has is that they don't think FRAND licenses should ever be a percentage of the final retail price. It makes no sense for a networking protocol patent to allow the holder to earn more if you improve your display or RAM and charge more for it. Apple is willing to pay and has offered to pay percentages of the chipsets that implement the patents, flat rates for the patents and/or licensing fees for the patents, but Google has refused and is thus being accused of not offering their patent fairly. Apple has a pretty good case here (I know, I know, this is Ars so I'm not really allowed to say that).

The problem here and in Apple's case is that Microsoft and Apple have been making product for many years using patents they haven't paid for. At least in Apple's case, they have refused binding arbitration at least once. How long should the patent owner have to wait to get paid?

I'm not familiar with the details of the Microsoft case, but the fundamental disagreement Apple has is that they don't think FRAND licenses should ever be a percentage of the final retail price. It makes no sense for a networking protocol patent to allow the holder to earn more if you improve your display or RAM and charge more for it. Apple is willing to pay and has offered to pay percentages of the chipsets that implement the patents, flat rates for the patents and/or licensing fees for the patents, but Google has refused and is thus being accused of not offering their patent fairly. Apple has a pretty good case here (I know, I know, this is Ars so I'm not really allowed to say that).

I would agree with most of your sentiment but they refused to binding arbitration. Apple, as much as they may dislike it, does not get to dictate what the price is. They have to negotiate. If they can't come up with an agreement, then an arbitrator has to step in. There is no reason for Apple to refuse arbitration if all they are looking for is a fair price. And for everyone else in the industry as far as I have seen, the standard has been based on device price. Maybe Apple is afraid a court will see that and ask more than Apple wants to pay?

If you can't make a compelling product without a particular feature (e.g. multi-touch) then doesn't that make it a de-facto standard?

I do believe Google and Android manufacturers have copied a few things from Apple, but surely there are a few things that consumers now expect with no alternative implementations. It would be nice if this legal opinion from on high went both ways.

If you can't make a compelling product without a particular feature (e.g. multi-touch) then doesn't that make it a de-facto standard?

In common parlance yes. Legally no.

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I do believe Google and Android manufacturers have copied a few things from Apple, but surely there are a few things that consumers now expect with no alternative implementations. It would be nice if this legal opinion from on high went both ways.

Err...USB 3 is a standardh264 is a standardHTTP 1.0 is a standard

How to poke your phone isn't, it just something a lot of venders need ensure their product supports.Now if a standard came out that allowed proper touch input into say a web page (as is possibly going to happen if we can bypass iOS's proprietary system) then that may have FRAND patents in it. The point is a standard is basically a public spec that dictates exactly how to do something so other venders products all work with yours. So if the spec says you must do X then you HAVE TO license the patent on X whether or not you actually need X for your product to work or you could do it another way. i.e. is the FRAND patent holders that have YOU over the barrel with your pants down and not the other way around.

Remember many FRAND patents cover (often very minor) things that could have been done many different ways, so getting them FRANDed is a way of getting money on often otherwise worthless patents.

If one of my patents was part of USB 1.0, would I have to agree to it being part of USB 2.0 and subsequent standards? Are they legally treated as the same standard, even if technically they may not be?

The exception only applies when a defendant simply won't pay even after an amount has been adjudicated to be fair. It doesn't just kick in as soon as the patent holder puts an offer on the table, and the patent holder doesn't get to just decide what is fair.

As a general matter, you can't get an injunction if money damages would suffice to make you whole, and the defendant can and will pay them. When a patent is FRAND you can't usually get an injunction since if you win the amount you are owed is pretty clear. By contrast, with non-FRAND patents there's no duty to issue a license on any terms. Thus you can't jut say that money damages would suffice (you might have wanted to keep the patent out of someone's hands) and an injunction is more appropriate.

Isn't that kinda contrary to the whole idea behind the patents? Technical ones are being used in standards and companies like apple and MS can ignore them for a long time without anything bad happening (worst case they have to pay the fees they would pay anyway).At the same time, those same companies are using very broad and increasingly obvious patents to block all kinds of competition.

So the question is what is the goal of patent system? To remove any standards? To allow over broad (design?) and obvious patents to be used to block competition while essential ones (interestingly enough it's these ones that cost a lot of money as they are result of a lot of research) are being ignored?

The problem here and in Apple's case is that Microsoft and Apple have been making product for many years using patents they haven't paid for. At least in Apple's case, they have refused binding arbitration at least once. How long should the patent owner have to wait to get paid?

I'm not familiar with the details of the Microsoft case, but the fundamental disagreement Apple has is that they don't think FRAND licenses should ever be a percentage of the final retail price. It makes no sense for a networking protocol patent to allow the holder to earn more if you improve your display or RAM and charge more for it. Apple is willing to pay and has offered to pay percentages of the chipsets that implement the patents, flat rates for the patents and/or licensing fees for the patents, but Google has refused and is thus being accused of not offering their patent fairly. Apple has a pretty good case here (I know, I know, this is Ars so I'm not really allowed to say that).

Apple, having purchased licensed parts that the parts manufacturer pays a license fee on has in fact paid for it already. And by virtue of exhaustion isn't required to license a second time what has already been paid for.

During the course of its participation in developing standards for the EuropeanTelecommunications Standards Institute and the 3G Project, Motorola submitted“declarations,” declaring that the ‘697, ‘559, ‘230 and ‘898 patents were essential orpotentially essential to the European Telecommunications Standards Institute’s standards,including the Global System for Mobile Communications (known as the GSM standard),Universal Mobile Telecommunications System (known as the UMTS standard) and 3GProject standards. Motorola also declared that those four patents were essential to standardsthat had already been adopted by the Institute and 3G Project. Motorola represented to theInstitute and the 3G Project that it would “grant irrevocable licences under the [intellectualproperty rights] on terms and conditions which are in accordance with . . . the [Institute’s][intellectual property rights] Policy.” Apple’s Cpt., dkt. #1, ¶¶ 71-75.Additionally, Motorola declared the ‘223 patent essential to the 802.11 standard and submitted an Intellectual Property Statement to the Institute of Electrical and ElectronicsEngineers, stating that Motorola agreed to license any patents essential to the 802.11standard on a non-discriminatory basis offering fair and commercially reasonable terms. Ina Letter of Assurance for Essential Patent Claims dated June 14, 2007, Motorola declaredthat the ‘712 patent and the ‘193 patent were essential to the practice of the 802.16estandard. The 802.16e Letter of Assurance stated that Motorola was prepared to grantlicenses to an “unrestricted number of applicants on a worldwide, non-discriminatory basiswith reasonable terms and conditions.” Id. at ¶ 88.Finally, in a “Statement from the Patent Holder” to the Telecommunication IndustryAssociation, Motorola declared that the ‘697, ‘712 and ‘193 patents were essential to theCDMA2000 standard. Motorola stated that it would make a license available for anydeclared-essential patent “under reasonable terms and conditions that are demonstrably freeof any unfair discrimination” Id. at ¶ 99.

Now just a few weeks after the iPhone hit the shelves, and long before an Android phone was even planned we have Motorola trying to revoke irrevocable FRAND patents.

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Apple’s original iPhone went on sale in June 2007. Apple’s original iPhone containedan Infineon baseband chipset, which incorporated technology covered by patents thatMotorola has declared as essential. Apple purchased the Infineon baseband chipset througha manufacturing agreement with Chi Mei Corporation, which manufactured the Infineonbaseband chipset under a licensing agreement with Motorola. On August 4, 2007, Motorola gave Chi Mei a 60-day suspension notice on its licensing agreement.

Apple was purchasing legal and licensed parts. The license to use them has been paid for.

Again, with Qualcomm we have Motorola trying to revoke irrevocable licenses in violation of both their FRAND commitments and their contract with Qualcomm.

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On December 16, 2009, Apple and Qualcomm entered into a contract whereby Applewould purchase chipsets from Qualcomm that were compliant with the CDMA2000standard. The chipsets incorporated technology that Qualcomm licensed from Motorola.On January 11, 2011, on the day Apple announced the Verizon iPhone 4, Motorola notifiedQualcomm of its intent to terminate any and all license covenant rights with respect toQualcomm’s business with Apple, effective February 10, 2011.

Again, Apple is purchasing legal and licensed parts. The license fee included in the price of each part they buy, and Motorola compensated per their agreement with Qualcomm. In this second act, Motorola is trying to say that Qualcomm can't sell licensed chips only to Apple. Again in violation of their FRAND agreements and in violation of their contract.

At what point here is Apple required to negotiate or to pay a second time?

It's clear who fired the first shots in these cell phone wars, and it wasn't Apple.

The exception only applies when a defendant simply won't pay even after an amount has been adjudicated to be fair. It doesn't just kick in as soon as the patent holder puts an offer on the table, and the patent holder doesn't get to just decide what is fair.

As a general matter, you can't get an injunction if money damages would suffice to make you whole, and the defendant can and will pay them. When a patent is FRAND you can't usually get an injunction since if you win the amount you are owed is pretty clear. By contrast, with non-FRAND patents there's no duty to issue a license on any terms. Thus you can't jut say that money damages would suffice (you might have wanted to keep the patent out of someone's hands) and an injunction is more appropriate.

Isn't that kinda contrary to the whole idea behind the patents? Technical ones are being used in standards and companies like apple and MS can ignore them for a long time without anything bad happening (worst case they have to pay the fees they would pay anyway).At the same time, those same companies are using very broad and increasingly obvious patents to block all kinds of competition.

So the question is what is the goal of patent system? To remove any standards? To allow over broad (design?) and obvious patents to be used to block competition while essential ones (interestingly enough it's these ones that cost a lot of money as they are result of a lot of research) are being ignored?

Patents are only obvious in hindsight. Apple spent years and millions of dollars developing the iPhone. And it was a huge gamble. Have a look at the press, and the comments from the CEO's of RIM, Palm, Nokia etc before it hit the market. "They are a computer company, they can't make a good phone." was the most common thread.

And most of those companies are pretty much dead or dying now.

If you have a standards essential patent that you voluntarily submit to be included into a standard then you get income from that with no risk at all. No marketing costs. No customers to keep happy. Just a steady stream of checks.

It is the non-essential patents that have a great risk of being rejected by consumers that also have the most 'value'. As they are what differentiates your product from others.

The exception only applies when a defendant simply won't pay even after an amount has been adjudicated to be fair. It doesn't just kick in as soon as the patent holder puts an offer on the table, and the patent holder doesn't get to just decide what is fair.

As a general matter, you can't get an injunction if money damages would suffice to make you whole, and the defendant can and will pay them. When a patent is FRAND you can't usually get an injunction since if you win the amount you are owed is pretty clear. By contrast, with non-FRAND patents there's no duty to issue a license on any terms. Thus you can't jut say that money damages would suffice (you might have wanted to keep the patent out of someone's hands) and an injunction is more appropriate.

Isn't that kinda contrary to the whole idea behind the patents? Technical ones are being used in standards and companies like apple and MS can ignore them for a long time without anything bad happening (worst case they have to pay the fees they would pay anyway).At the same time, those same companies are using very broad and increasingly obvious patents to block all kinds of competition.

So the question is what is the goal of patent system? To remove any standards? To allow over broad (design?) and obvious patents to be used to block competition while essential ones (interestingly enough it's these ones that cost a lot of money as they are result of a lot of research) are being ignored?

Patents are only obvious in hindsight. Apple spent years and millions of dollars developing the iPhone. And it was a huge gamble. Have a look at the press, and the comments from the CEO's of RIM, Palm, Nokia etc before it hit the market. "They are a computer company, they can't make a good phone." was the most common thread.

And most of those companies are pretty much dead or dying now.

If you have a standards essential patent that you voluntarily submit to be included into a standard then you get income from that with no risk at all. No marketing costs. No customers to keep happy. Just a steady stream of checks.

It is the non-essential patents that have a great risk of being rejected by consumers that also have the most 'value'. As they are what differentiates your product from others.

Having your patent as a part of standard is obviously a risk. First of all you spent a lot of money in order to research something that anyone can use and they can even refuse to licence it without anything bad happening.At the same time another company spends money getting random patents on anything and everything and uses those same patents to block your products as they too broad and in most cases quite obvious.

So your version is that company should not waste R&D money on the actual technology that powers the computers/phones/whatever but instead concentrate on patenting design, feel, software, business practices and so on. After all you can always licence the essential parts from someone else and block competition with your army of dubious patents.Great plan except that it works as long as a few companies are using that kind of parasitic behaviour. As soon as many start doing it the system collapses as the ones that were investing in actual technology development get pushed out of the business by the parasitic ones.

The exception only applies when a defendant simply won't pay even after an amount has been adjudicated to be fair. It doesn't just kick in as soon as the patent holder puts an offer on the table, and the patent holder doesn't get to just decide what is fair.

As a general matter, you can't get an injunction if money damages would suffice to make you whole, and the defendant can and will pay them. When a patent is FRAND you can't usually get an injunction since if you win the amount you are owed is pretty clear. By contrast, with non-FRAND patents there's no duty to issue a license on any terms. Thus you can't jut say that money damages would suffice (you might have wanted to keep the patent out of someone's hands) and an injunction is more appropriate.

Isn't that kinda contrary to the whole idea behind the patents? Technical ones are being used in standards and companies like apple and MS can ignore them for a long time without anything bad happening (worst case they have to pay the fees they would pay anyway).At the same time, those same companies are using very broad and increasingly obvious patents to block all kinds of competition.

Nobody forces you to standardise stuff based on your patent. If it is world leading enough then yes you could probably go it alone and carve out the market for yourself. But, if your invention needs other companies technology to be useful, is only a minor improvement on the existing standard and the people down the road are probably working in a similar direction, or is some embedded function (e.g. a new DSP technique for high efficiency WiFi) then you are going to have to get others on board. This is especially true if it breaks compatibility with existing stuff. The easiest way to do that is to roll out a new standard, but that is your business decision to do that. To say that companies should be offered the advantages of having their patented technology included in a new standard but still get to use the ban hammer is like having your cake & eating it.

Using your example of MS imagine they came out with a new Kinect that was so good it made even touch based tablets obsolete... Should they be forced to give their patents away just because nobody else could do it? No. But, they might decide that they could make more money licensing the interface to others and again could charge what they wanted and only to who they wanted (assuming they don't create any anti-trust issues). But if they found nobody was interested unless its technology was standardised so it could be used more flexibly and so companies don't end up with single vendor issues then yes at that point it is FRAND and they loose control but if they make a big pile of cash from that...

P.S. everyone uses obvious patents to hit their competitors (they should be rejected but often aren't especially in the US it appears). For example, there are lots of patents to odd shaped bolts and nuts that appear to exist for no other reason than to prevent companies produced aftermarket add-ons or spares.People here seem to think software patents are a special case of obvious, they are just as many obvious/junk patents in other areas its just the ratio of good/bad is VERY low for software patents.

The exception only applies when a defendant simply won't pay even after an amount has been adjudicated to be fair. It doesn't just kick in as soon as the patent holder puts an offer on the table, and the patent holder doesn't get to just decide what is fair.

As a general matter, you can't get an injunction if money damages would suffice to make you whole, and the defendant can and will pay them. When a patent is FRAND you can't usually get an injunction since if you win the amount you are owed is pretty clear. By contrast, with non-FRAND patents there's no duty to issue a license on any terms. Thus you can't jut say that money damages would suffice (you might have wanted to keep the patent out of someone's hands) and an injunction is more appropriate.

Isn't that kinda contrary to the whole idea behind the patents? Technical ones are being used in standards and companies like apple and MS can ignore them for a long time without anything bad happening (worst case they have to pay the fees they would pay anyway).At the same time, those same companies are using very broad and increasingly obvious patents to block all kinds of competition.

So the question is what is the goal of patent system? To remove any standards? To allow over broad (design?) and obvious patents to be used to block competition while essential ones (interestingly enough it's these ones that cost a lot of money as they are result of a lot of research) are being ignored?

Patents are only obvious in hindsight. Apple spent years and millions of dollars developing the iPhone. And it was a huge gamble. Have a look at the press, and the comments from the CEO's of RIM, Palm, Nokia etc before it hit the market. "They are a computer company, they can't make a good phone." was the most common thread.

And most of those companies are pretty much dead or dying now.

If you have a standards essential patent that you voluntarily submit to be included into a standard then you get income from that with no risk at all. No marketing costs. No customers to keep happy. Just a steady stream of checks.

It is the non-essential patents that have a great risk of being rejected by consumers that also have the most 'value'. As they are what differentiates your product from others.

Having your patent as a part of standard is obviously a risk. First of all you spent a lot of money in order to research something that anyone can use and they can even refuse to licence it without anything bad happening.At the same time another company spends money getting random patents on anything and everything and uses those same patents to block your products as they too broad and in most cases quite obvious.

So your version is that company should not waste R&D money on the actual technology that powers the computers/phones/whatever but instead concentrate on patenting design, feel, software, business practices and so on. After all you can always licence the essential parts from someone else and block competition with your army of dubious patents.Great plan except that it works as long as a few companies are using that kind of parasitic behaviour. As soon as many start doing it the system collapses as the ones that were investing in actual technology development get pushed out of the business by the parasitic ones.

Where your argument falls apart is in a few places. First off, in not acknowledging that the non-essential patents Apple has required a lot of R&D, and assumed great risk. Also, these patents are only obvious in hindsight. The next mistake is in assuming that Apples non essential patents are the only way to do things. And can't be worked around. They can be, and have been. Further, if you own a smartphone, then some of the patents in it are FRAND encumbered Apple patents. You can't build a modern cell phone without them. I wouldn't call them a parasite. Should Apple do with their FRAND encumbered patents what Motorola and Samsung are trying? Or should they continue to honor their agreements and FRAND licenses?

You are also playing up the risk of having your patent included in a standard. The only actual risk is if the standard decides to not use your patents. At that point they have little or no value. But once accepted, it is risk free money. By playing these stupid FRAND games Motorola and Samsung run the very real risk of being excluded from any future standards. Not good for shareholders and not good for consumers. All around a very bad play.

You still haven't explained how it was fine for Motorola to start playing FRAND games just a few weeks after the iPhone hit the market. Can you do that please? Motorola may have some good engineers, or at least they used to. But they have been a corporate thug for decades now. Long before Apple entered the cell phone market, going back to the days of radio. This behavior on their part is nothing new.

Isn't that kinda contrary to the whole idea behind the patents? Technical ones are being used in standards and companies like apple and MS can ignore them for a long time without anything bad happening (worst case they have to pay the fees they would pay anyway).

Not in the least. If Apple or Microsoft are found to have infringed a patent they have to pay the fair amount--not the amount that the patent-holder unilaterally claimed is fair. And if the court finds they've been bad actors (for example, the amount demanded actually was fair) legal fees, etc, might be appropriate. This is "a bad thing." They have lost a lawsuit and have to pay damages.

At no point does a company that has put on the table the fact that you can pay for its patents, get to claim that it needs an injunction. Injunctions are for irreparable, or unquantifiable harm. With FRAND patents the companies are just arguing about how much money should change hands, and the fact is that it will, eventually.

Apple had their chance to argue those points. It did so poorly, as did Motorola, that Posner threw the whole case out with prejudice. There has been no legal ruling yet on whether or not what Motorola did was wrong. However, Apple did ask for Judge Crabb to bind Motorola to a fee that Apple wanted to pay with no negotiation. But Apple wasn't going to pay if the fee wasn't to its liking. That got the whole issue thrown out as well. Don't you see the pattern here. These cases are so ridiculous that the courts keep throwing them out.

Apple had their chance to argue those points. It did so poorly, as did Motorola, that Posner threw the whole case out with prejudice. There has been no legal ruling yet on whether or not what Motorola did was wrong. However, Apple did ask for Judge Crabb to bind Motorola to a fee that Apple wanted to pay with no negotiation. But Apple wasn't going to pay if the fee wasn't to its liking. That got the whole issue thrown out as well. Don't you see the pattern here. These cases are so ridiculous that the courts keep throwing them out.

Do you feel then that it is OK to break your contacts and obligations that you commit to? It will just be refiled btw, and you better hope for consumers sake that this FRAND abuse is hammered flat. If it isn't, and the FRAND system is broken, we're all screwed.

There are multiple ways to break the FRAND system. Removing the rights of patent holders will break it just as easily. Also, you do realize that Motorola's side of the story is quite different and you can't take everything Apple says at face value. They have a rather poor history of dealing with FRAND patents with other companies as well. I am sure each side has points in their favor. But refusing to through arbitration, which is part of the FRAND process, makes you just as bad as someone who isn't honoring their FRAND responsibilities. Its a two way street.

In the end, I have never believed that any of these lawsuits were truly about the patents. These companies haven't had problems making deals before now. Why is now different? Because its a battle over the market share for the platforms.Apple and Microsoft are the new kids on the mobile block, and they are using every trick they can to take market share.

Clearly the companies that invest in R&D to design the standards and protocols that fuel new products are not deserving of protection. You should only be able to get patent protection on truly innovative things like rounded rectangles and sliding to unlock.

Funny to see this downrated so much. Apple fanbois got their panties in a knot?

I can understand the heartache over standards patents. Thing is, standards patents are supposed to be a trade-off. Those who develop a patent that will have widespread use because it will be employed as part of a "standard" should expect there to be some "protection" taken away. After all, it's being pushed as part of a standard, not standing alone on its own merits. There's a give and take here.

That said, this brings me to the question....... should some of this stuff actually GET a patent? Honestly, I think this is part of the problem. I really think the bar for a patent should be set higher, and for a lot of these things that frequently become FRAND, there needs to be something else created that may still carry significant legal weight and be of some profit to its creator due to its usefulness..... but is "weaker".

Apple had their chance to argue those points. It did so poorly, as did Motorola, that Posner threw the whole case out with prejudice. There has been no legal ruling yet on whether or not what Motorola did was wrong. However, Apple did ask for Judge Crabb to bind Motorola to a fee that Apple wanted to pay with no negotiation. But Apple wasn't going to pay if the fee wasn't to its liking. That got the whole issue thrown out as well. Don't you see the pattern here. These cases are so ridiculous that the courts keep throwing them out.

Do you feel then that it is OK to break your contacts and obligations that you commit to? It will just be refiled btw, and you better hope for consumers sake that this FRAND abuse is hammered flat. If it isn't, and the FRAND system is broken, we're all screwed.

I agree and disagree Scan. I agree that FRAND abuse needs to be hammered flat. I disagree in that it needs to be hammered flat in both directions. In the case of Motorola v Apple, I agree that Motorola needs to play fair, but at the same time..... the idea that Apple should get to dictate what it pays for its fee..... that's BS. That isn't fair at all.

Apple had their chance to argue those points. It did so poorly, as did Motorola, that Posner threw the whole case out with prejudice. There has been no legal ruling yet on whether or not what Motorola did was wrong. However, Apple did ask for Judge Crabb to bind Motorola to a fee that Apple wanted to pay with no negotiation. But Apple wasn't going to pay if the fee wasn't to its liking. That got the whole issue thrown out as well. Don't you see the pattern here. These cases are so ridiculous that the courts keep throwing them out.

Do you feel then that it is OK to break your contacts and obligations that you commit to? It will just be refiled btw, and you better hope for consumers sake that this FRAND abuse is hammered flat. If it isn't, and the FRAND system is broken, we're all screwed.

I agree and disagree Scan. I agree that FRAND abuse needs to be hammered flat. I disagree in that it needs to be hammered flat in both directions. In the case of Motorola v Apple, I agree that Motorola needs to play fair, but at the same time..... the idea that Apple should get to dictate what it pays for its fee..... that's BS. That isn't fair at all.

Considering a license fee was paid on each part they purchased and used I'd disagree. The $1.00 per phone is go away money. Any more than that, and it's cheaper to fight it out. And this is what they told the court. Brazen? Perhaps. Or just being up front. I'm not a 'fan' of anyone. I like Apple products. And Microsoft's, and most any other tech out there. I guess I am a technology fan more than anything. And I am also a fan of right and wrong. Of honesty, and keeping your word. Motorola hasn't done that.

Apple had their chance to argue those points. It did so poorly, as did Motorola, that Posner threw the whole case out with prejudice. There has been no legal ruling yet on whether or not what Motorola did was wrong. However, Apple did ask for Judge Crabb to bind Motorola to a fee that Apple wanted to pay with no negotiation. But Apple wasn't going to pay if the fee wasn't to its liking. That got the whole issue thrown out as well. Don't you see the pattern here. These cases are so ridiculous that the courts keep throwing them out.

Do you feel then that it is OK to break your contacts and obligations that you commit to? It will just be refiled btw, and you better hope for consumers sake that this FRAND abuse is hammered flat. If it isn't, and the FRAND system is broken, we're all screwed.

I agree and disagree Scan. I agree that FRAND abuse needs to be hammered flat. I disagree in that it needs to be hammered flat in both directions. In the case of Motorola v Apple, I agree that Motorola needs to play fair, but at the same time..... the idea that Apple should get to dictate what it pays for its fee..... that's BS. That isn't fair at all.

Considering a license fee was paid on each part they purchased and used I'd disagree. The $1.00 per phone is go away money. Any more than that, and it's cheaper to fight it out. And this is what they told the court. Brazen? Perhaps. Or just being up front. I'm not a 'fan' of anyone. I like Apple products. And Microsoft's, and most any other tech out there. I guess I am a technology fan more than anything. And I am also a fan of right and wrong. Of honesty, and keeping your word. Motorola hasn't done that.

Sorry, but we will have to agree to disagree. I am not convinced that Apple paid anything after the chip maker had its license revoked. I am also not sure that the chip maker had a legitimate license and not a "will not sue" agreement. Finally, I question whether what Qualcomm and the other company were paying was based on their product's pricing, and not Apple's. If Motorola asks the same from everyone, and then Apple buys chips licensed to Qualcomm, maybe it was an attempt by Apple to get away with a lower price. Unfortunately I think most of my questions will not be answered as those facts will never be released.

If I have a patent that I submit for inclusion in/as a standard, is there any post inclusion control over what that standard is used for, or the devices that it is used in? For example, to take a probably far fetched analogy...

My patent is included in the standards for communications in a network between phones and the network they are on. 7 years later a car manufacturer wants to hook up thei new models to a network. They want to use mobile networks to enable this communication.

Are my patents in the phone standards automatically granted to the car manufacturer on previously agreed FRAND terms, or do I have the right to say "No, that patent was only included in the standard as envisioned using personal mobile communication devices, and not cars"? Who makes the decision that this is OK or not? Is there an industry standards body that assents to the standards being used by the car makers without any of the patent holders in that standard being able to object?

The reason for my question is, when you have your patent included in a standard, does that remove your control over your patent in that standard, even if at the time of inclusion the standard's use wasn't intended for what it may end up being used for/as?

After being included in a standard, can I then remove a patent from that standard, or is it signed up for life?

The answer is you are obligated to license on FRAND terms.

There are cases where patent holders have tried to circumvent the system by licensing to one or more parties technology that is, essentially, standards essential and then withholding permissions of those parties to sublicense to their competitors, but generally where courts rule the technology was standards essential the ruling go against the original holders.

For example, the case where Samsung licensed Qualcom on some communications protocols and then "withdrew" these licenses from Qualcom and sued Apple (Qualcom's customer).

The problem here and in Apple's case is that Microsoft and Apple have been making product for many years using patents they haven't paid for. At least in Apple's case, they have refused binding arbitration at least once. How long should the patent owner have to wait to get paid?

I'm not familiar with the details of the Microsoft case, but the fundamental disagreement Apple has is that they don't think FRAND licenses should ever be a percentage of the final retail price. It makes no sense for a networking protocol patent to allow the holder to earn more if you improve your display or RAM and charge more for it. Apple is willing to pay and has offered to pay percentages of the chipsets that implement the patents, flat rates for the patents and/or licensing fees for the patents, but Google has refused and is thus being accused of not offering their patent fairly. Apple has a pretty good case here (I know, I know, this is Ars so I'm not really allowed to say that).

I would agree with most of your sentiment but they refused to binding arbitration. Apple, as much as they may dislike it, does not get to dictate what the price is. They have to negotiate. If they can't come up with an agreement, then an arbitrator has to step in. There is no reason for Apple to refuse arbitration if all they are looking for is a fair price. And for everyone else in the industry as far as I have seen, the standard has been based on device price. Maybe Apple is afraid a court will see that and ask more than Apple wants to pay?

I think the point you are missing is Google was demanding a percentage of the end product (phone) value using the part not a percentage of the part value, which is completely unreasonable. So why should Apple agree to that?

Edit to elaborate:

If the dispute were a simple matter of how much Apple should pay as a percentage of part value it would be reasonable to expect them to go to arbitration, but I think the issue in dispute was whether the settlement should be based on part price verses end product price, and that's a completely different matter.

If one of my patents was part of USB 1.0, would I have to agree to it being part of USB 2.0 and subsequent standards? Are they legally treated as the same standard, even if technically they may not be?

Depends on the case, but generally yes. In the case of USB, the standards organization is actually a private consortium and technology included in the standard becomes and essential part of the standard and is transferable to a higher revision (i.e., USB 1.0 to USB 2.0, etc).

It is usually in the interest of the FRAND patent holder to promote new uses since it increases royalty revenue.